Bread Financial Holdings (NYSE:BFH) pays a dividend of $0.21 on December 13th. This means the annual payout would be 1.7% of the current stock price, which is in line with the industry average.
Check out our latest analysis for Bread Financial Holdings.
A stable dividend yield is great, but it’s only really useful if the payments are sustainable.
Bred Financial Holdings has a good history of paying dividends, with a current track record of 8 years. Although historical data does not guarantee the future, Bread Financial Holdings’ latest earnings report shows a payout ratio of 8.5%, indicating that the company can afford to pay its dividend. .
EPS is projected to decline by 21.4% over the next three years. However, analysts estimate that the future payout ratio could be 12% over the same period, which we think is easily sustainable.
historic dividend
Bred Financial Holdings has been paying dividends for a while, but its track record hasn’t been stellar. This makes us cautious about dividend consistency across business cycles. Since 2016, dividends have gone from a total of $2.08 to $0.84 per year. That’s about a 60% decrease over that time. Generally speaking, companies whose dividends decrease over time are not what we’re looking for.
Given that dividend payments are shrinking like a glacier in a warming world, we need to see if there are any positive signs for the future. Over the past five years, Bread Financial Holdings’s earnings per share have decreased at an annual rate of approximately 9.3%. If profits continue to decline, the company could be forced to make the difficult choice of cutting its dividend or, as opposed to increasing it, stopping it altogether.
Overall, it’s great to see stable dividend payments, but we think the current payout levels may become unsustainable in the long term. Bread Financial Holdings earns enough profits to cover its dividend, but we’re generally unimpressed with its future prospects. This company is not among the top stocks that provide returns.
It’s important to note that companies with a consistent dividend policy generate greater investor confidence than companies with an erratic dividend policy. At the same time, there are other factors that readers should be aware of before pouring capital into stocks. For example, we’ve identified 2 warning signs for Bread Financial Holdings (1 is significant!) that you should be aware of before investing. Looking for more high-yield dividend ideas? Check out our collection of high-yield stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodologies, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
